With the hustle and bustle of the end of the year already approaching, now is a great time to dust off your company’s ERISA Fiduciary Liability policy to make sure your plan trustees have strong and comprehensive coverage. Fiduciary liability policies cover claims related to the administration and operation of pension and health and welfare plans. Unlike D&O coverage, fiduciary liability policies rarely receive much attention, but they can also offer significant protection to a company’s board of directors or other plan trustees.
While renewing a fiduciary liability policy is one of the annual things employers often do automatically, knowing before renewal what a policy covers – and what it excludes – is critical to identifying and fill any protection gap. A review of a policy, to ensure that it offers strong coverage, should consider issues such as whether the policy covers all of the plan’s trustees (including a committee) and whether the level of coverage is adequate to cover exposure to full liability for matters such as statutory taxes / penalties (e.g. IRS penalties for pension plans, HIPAA violations, ACA coverage and reporting assessments), pre-complaint investigations, audits, regulatory remediation program participation and cybersecurity, to name a few.
Having a strong fiduciary responsibility policy in place is a critical part of an employer’s comprehensive benefits package. And understanding the extent of coverage before a claim occurs or policy renewal is a good practice to avoid surprises later.